World markets had already been higher earlier, including strong gains in Asia, after the U.S. Federal Reserve slashed interest rates Wednesday to help revive the world‘s largest economy and opened new credit lines with other central banks in an attempt to deal with the world financial crisis.
The FTSE 100 index of leading British shares was 103.93 points, or 2.5 percent, higher at 4,346.47, in afternoon trading London time, while France‘s CAC-40 was up 71.41 points, or 2.1 percent, at 3,474.28.
The renewed bout of buying was stoked by a Commerce Department report showing that U.S. gross domestic product, or GDP, decreased at a 0.3 percent annual rate in the July-September quarter. That is less of a drop than the 0.5 percent analysts expected.
"The very marginal contraction shows some resilience in the U.S. economy although recession remains certain," he added.
Fed Chairman Ben Bernanke and his colleagues pledged that they would "monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."
The Fed said it will provide up to $30 billion to each of the central banks. It is the latest in a series of "swap" arrangements where the Fed provides dollars in exchange for reserves of the other nations‘ currencies.
The International Monetary Fund also said Wednesday it is creating a new program to get money quickly to developing countries with strong economies that are facing cash crunches in the global financial crisis.
Asian markets closed sharply higher, with Hong Kong‘s Hang Seng index leading the charge, up 12.8 percent at 14,329.85. South Korea‘s key stock index soared a record 12 percent to 1,084.72 and Japan‘s Nikkei 225 stock average gained 10 percent percent to 9,029.76 as exporters like Toyota and Sony got a boost from the ongoing fall in the value of the yen.
Elsewhere, benchmarks in Australia, Singapore, Taiwan and the Philippines added 4 percent or more. Russia‘s two main indices were also up sharply.
Hong Kong‘s de facto central bank followed by cutting its key lending by the same amount as the Fed and Taiwan reduced its key interest rate by a quarter point. In Japan, speculation mounted that the central bank would cut its key rate, already at a low 0.5 percent, at a meeting Friday.
Before the Fed acted, China also lowered its rates by just over a quarter point. The Shanghai Composite index was up 2.9 percent.
Markets also took heart from an announcement that the Fed would temporarily supply new lines of credit worth up to $30 billion to the central banks of South Korea, Brazil, Mexico and Singapore to help relieve the global credit crisis.
The modest improvement in market sentiment was evidenced in oil prices, which rose $0.09 to $67.59. The contract rose $4.77 to settle at $67.50 overnight.
In currencies, the dollar rose 1.5 percent to 98.65 yen, while the euro was 0.6 percent higher at $1.3043. Meanwhile, the pound strengthened another 0.8 percent to $1.6479.
